Insurance issue

“Responsible drivers who purchase insurance end up paying for injuries caused by uninsured drivers.” –Elizabeth Sprinkel, senior vice president, Insurance Research Council

Here’s a growing problem that should worry truckers, whether you are a fleet or owner-operator – a rising number of uninsured motorists on the highway.

According to a study conducted by the Malvern, PA-based Insurance Research Council (IRC), approximately one in six drivers across the U.S. may be driving uninsured by 2010. Although the group said the estimated percentage of uninsured motorists decreased nationally, from 14.9 percent in 2003 to 13.8 percent in 2007, the recent economic downturn is expected to trigger a sharp rise in the uninsured motorist rate.

“An increase in the number of uninsured motorists is an unfortunate consequence of the economic downturn and illustrates how virtually everyone is affected by recent economic developments," said Elizabeth Sprinkel, the IRC’s senior vice president.

The IRC study examined data collected from nine insurers, representing approximately 50 percent of the private passenger auto insurance market in the U.S. for its report – entitled Uninsured Motorists, 2008 Edition. She noted the IRC estimates the uninsured driver population using a ratio of insurance claims made by individuals who were injured by uninsured drivers to claims made by individuals who were injured by insured drivers.

It doesn’t take a rocket scientist to figure out that if a trucker gets involved in an accident with an uninsured motorist, getting recompense for damages is going to be hard if not impossible. And since car drivers are responsible for causing truck-car collisions about 70 percent of the time, having more of them uninsured increases the business risks for truckers when it comes to accident claims.

In all fairness, we should note the IRC is a division of the American Institute for CPCU and the Insurance Institute of America. Though the IRC’s mission is to provide timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers and neither lobbies nor advocates legislative positions, they are funded by insurance providers – so that may color their work just a tad.

Putting that aside, though, the numbers are still worrisome. The IRC’s report found that the magnitude of the uninsured motorist problem varies widely from state to state. In 2007, the five states with the highest uninsured driver estimates were New Mexico (29 percent), Mississippi (28 percent), Alabama (26 percent), Oklahoma (24 percent), and Florida (23 percent). The five states with the lowest uninsured driver estimates were Massachusetts (1 percent), Maine (4 percent), North Dakota (5 percent), New York (5 percent), and Vermont (6 percent).

The report also found a strong correlation between the percent of uninsured motorists and the unemployment rate: An increase in the unemployment rate of one percentage point is associated with an increase in the uninsured motorist rate of more than three-quarters of a percentage point. Based on current unemployment rate projections, the percentage of uninsured motorists is expected to rise from 13.8 in 2007 to 16.1 in 2010.

“Dropping auto insurance coverage should never be an option as a way to save money,” said William Pearse, vice president of product strategy and design for Hartford, CT-based Travelers Insurance, in written comments about the IRC’s study. “Not having auto coverage could mean financial ruin if you are in an accident where property is damaged or individuals are injured,” he stressed.

He also pointed out that nearly every state requires individuals to possess auto liability coverage and every state has laws in place regarding financial responsibility. Therefore, if a particular state does not require auto liability coverage by law, an individual must have the financial assets to pay all claims in the event of an accident, Pearse noted.

That doesn’t help the trucker much if a car driver is both at fault and un-insured in a truck-car crash.